If you’re looking to borrow money and you’re willing to use your asset or property for collateral, you might find great deals when you opt for secured loans. Secured loans, as its name implies, are personal loans secured on an asset such as your home, vehicle, bank accounts, stocks, bonds and more. Because there’s security, the risks are lower for lenders allowing them to offer borrowers loan deals with lower interest rates.
If you need a large amount of money for a financial emergency or investment, secured loans may be the best option you can take advantage. Here are some of the most common types of secured loans available in the UK today:
Mortgage loans are among the most common secured loans for people looking to buy a house. This type of loan is secured by the property you are purchasing. In other words, your home is at risk for foreclosure in the event that you are unable to pay your monthly mortgage payments. Since homes are a major investment or purchase, mortgage loans come with longer repayment terms usually lasting for 15 to 30 years. The interest rate is also lower in most cases because of the security involved.
Home equity loan
If you are currently a homeowner and you want to borrow on your home’s equity or line of credit, you can do so with home equity loans. This type of loans is essentially a type of second mortgage allowing you to cash in on your home’s equity. This type of loan is usually offered for borrowers who wish to remove their homes, consolidate debts or fund college education. With home equity loans, the maximum amount you can borrow will depend on the current market value of your home and how much you’ve already paid on your mortgage.
An auto or vehicle loan works just like your mortgage loan. The car you’re purchasing will be used as collateral that in the event of nonpayment, the lender can repossess your vehicle. With this type of financing, the lender usually pays for your vehicle in full then you pay your lender on a monthly basis including interest. Before you can avail an auto loan, lenders have a few key requirements you need to meet. You must live in the UK with a steady stream of income per month. You must also have a good credit history to be able to avail the lowest interest rates available.
Title loans, on one hand, are loans that use your asset or property title to give you a personal loan. For example, you can use your paid-off vehicle’s logbook document to take out a logbook loan. In order to avail this type of loan, you need to meet the basic requirements as with other types of loans. But there’s one advantage with title loans. It is usually available for people with bad credit. You’ll need to pay higher interest rates in exchange but for most people who cannot avail a loan elsewhere, title loans come as handy alternatives.
If you have money stashed on the bank, you can use that to secure your loan. There are lenders offering savings-secured loans for people who don’t have a home or a vehicle they use as collateral. When you opt for this type of loan, your lender will require your bank statements. If approved for the loan, the bank will place a hold on the funds until you’ve paid off your loan in full. Other than savings, you can use your CDs or bond certificates to avail this type of loan.